An exchange like this would only be incredulous to a liberal. After all it's the Left that loves to make the ridiculous claim that FOX News is nothing but an arm of the GOP. But anyone who actually watches FOX (which most liberals don't) knows full well that FOX not only invites plenty liberal pundits on air (something Krazy Olbermann never does with conservatives), but in making "fair and balanced" their slogan, they prove it by consistently presenting both sides of the debate, esp. O'Reilly (and that's why Bill remains on top).
As for Palin, if she going to run for president one day, she needs to put her ego aside, come more prepared and go on O'Reilly more because Bill isn't going to let her get away with vague, conservative buzzwords on how to handle tough issues--anyone who watches "The O'Reilly Factor" every night knows that. In other words, debating O'Reilly on key policy issues can only benefit Palin's credibility and make her more appealing to independents who are running as far as away from Barack Obama as possible.